NEW YORK, Sept 1 (Reuters) - Wall Street gained modestly on Friday as a tepid U.S. jobs report kept expectations muted for another interest rate hike this year, while investors kicked off a typically dour month for stocks on a positive note.

U.S. job growth slowed more than expected in August after two straight months of hefty increases. The Labor Department said on Friday nonfarm payrolls increased by 156,000 last month, while economists had forecast an increase of 180,000.

Following the data, traders were betting on a 39 percent chance that the Federal Reserve would raise rates at its December meeting, similar to bets earlier in the week, according to the CME Group’s FedWatch tool.

“The latest economic data that came out today ... didn’t provide information to the Fed that they need to go out and raise interest rates,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

“The data kind of continued to show this Goldilocks-type situation, which the market tends to like,” Carlson said. “It’s not too hot, it’s not too cold.”

The Dow Jones Industrial Average rose 39.46 points, or 0.18 percent, to end at 21,987.56, the S&P 500 gained 4.9 points, or 0.20 percent, to 2,476.55 and the Nasdaq Composite added 6.67 points, or 0.1 percent, to 6,435.33.

Market watchers were also digesting other economic data. U.S. construction spending unexpectedly fell in July, hitting a nine-month low, but the Institute for Supply Management said its index for factory activity soared to 58.8 in August, the highest reading since April 2011.

“The markets are up, I think, because the economic data that has been released is still supportive of economic growth, still supportive of earnings growth, which ultimately is going to drive stock prices,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Energy and materials led among major stock sectors while utilities lagged the most.

The S&P 500 hovered near all-time highs as major stock indexes marked gains for a second straight week. The Nasdaq tallied a record closing high after minting its best week of the year.

The benchmark S&P had posted a 0.06 percent gain in August, its most sluggish monthly performance since March’s slight decline. September ranks as the worst month for stocks, according to the Stock Trader’s Almanac.

Shares of major automakers climbed after the companies reported better-than-expected August sales and issued optimistic outlooks as Houston area residents replace cars and trucks after Hurricane Harvey. General Motors rose 2.2 percent and Ford Motor gained 2.9 percent.

Advancing issues outnumbered declining ones on the NYSE by a 2.30-to-1 ratio; on Nasdaq, a 1.92-to-1 ratio favored advancers.

About 5.1 billion shares changed hands in U.S. exchanges, below the 5.8 billion daily average over the last 20 sessions. (Additional reporting by Sruthi Shankar and Tanya Agrawal in Bengaluru; Editing by Saumyadeb Chakrabarty and James Dalgleish)